Runoff vs plurality : the effects of the electoral system on local and central government behaviour

Plurality and runoff systems offer very different incentives to parties and coalition of voters, and demand different political strategies from potential candidates and chief executives. Italian mayors and city councils are elected with a different electoral system according to the locality's population, while municipalities are otherwise treated identically in terms of funding and powers. We exploit this institutional feature to test how the presence of different electoral systems affects the central government decisions on grants, and the local government decisions on local taxes. We find evidence that the upper-tier governments favour runoff-elected mayors, and that runoff-elected mayors levy lower taxes. This is broadly consistent with the literature on runoff and plurality rule electoral systems.